Singapore Airlines posted a record US$3.2 billion full-year loss for the 2020 financial year, marking its second consecutive annual loss.
The result exceeded analysts expectations, with forecasts for the company’s results in the 12 months to 31 March 2021 averaging US$2.46 billion.
The loss was largely driven by the impact of the COVID-19 pandemic, as well as US$1.5 billion in impairment charges on at least 45 older aircraft surplus to requirements.
Singapore Airlines reported a 76.1 per cent drop in revenue, to US$2.87 billion, largely propped up by its cargo operations.
Passenger-wise, the airline saw just 2 per cent of its usual passenger traffic figures.
The airline has said it is expecting to see its passenger capacity increase to 28 per cent of its pre-pandemic capacity by June this year.
Singapore also reported an annual loss in the 2019 financial year of US$212 million, as the airline was impacted significantly by the early days of the pandemic and an overnight end to demand for international travel.
Analysts have long predicted that city-state carriers, such as Singapore Airlines and Cathay Pacific, would take a larger financial hit during the pandemic than most traditional airlines, as they have no domestic network to rely upon until international conditions improve.
In light of its financial results, the airline said it would issue US$4.7 billion of mandatory convertible bonds to help it weather the remainder of the pandemic.
The bonds issue formed as an optional part of a US$11.2 billion rescue package lead by its majority shareholder, state-owned holding company Temasek Holdings.
The announcement comes days after Singapore announced it had carried 95,000 passengers in April – a figure 10 times higher than the same month last year but still far short of its pre-COVID total of 1.8 million.
The airline said there was “growing optimism” due to the increased pace of vaccines being rolled out but warned border restrictions caused by new waves of the virus are still having an effect.
The mixed news came shortly after Singapore and Hong Kong agreed to start a modest travel bubble from 26 May, which has the potential to increase activity.
However, the start date for the bubble has since been postponed for the second time, due to a recent rise in COVID-19 numbers in Singapore.
“This crisis is not over,” Singapore Airlines chairman Peter Seah said in a statement. “While the growing pace of vaccinations has given us hope, new waves of infections around the world mean that restrictions on international travel largely remain in place.”
The bubble was originally agreed upon by both city-states in October, and will begin with just one flight per day.
The agreement, which allows passengers to forego quarantine, was due to launch in November but was delayed after a spike of cases in Hong Kong.
Its launch will mark the second major travel corridor to open between countries operating a hotel isolation program, after Australia and New Zealand restarted travel earlier this month.
Ong Ye Kung, Singapore’s Minister for Transport, said, “I am happy that Hong Kong got the COVID-19 situation under control. It has been a long few months, but the conditions are now ripe again to re-launch the Air Travel Bubble.”
The deal will initially include just one flight carrying a maximum of 200 passengers for the first fortnight, before expanding.
All passengers departing from Hong Kong must be vaccinated, while customers from both cities are expected to take a test within three days of departure and then again on arrival.
The arrangement will be suspended if the seven-day average of unlinked community cases in either city increases to more than five.